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Updated on: November 29, -0001

CMS Proposed Rule for OPPS: Who Will Audit the Rule

By Mary Beth Pace, RN, BSN Original story posted on:
July 8, 2015

Thursday, July 2 proved to be a busy day for many people who were just getting ready to enjoy the long holiday weekend. The Centers for Medicare & Medicaid Services (CMS) came out with their 697-page proposed OPPS rule for comment. The proposed rule itself is open for comment until Aug. 31, 2015.

Normally, we would then receive the final rule some time in October/November and the changes would go into place effective Jan. 1, 2016. However, CMS has suggested this may change this year. They are proposing the changes to the two-midnight rule actually take place Oct. 1, 2015 (the same day as ICD-10!). The changes would not take effect, however, unless a final rule is issued.

Please take some time to review/read the rule itself, but for your convenience, I have quoted the parts that are important to us from a hospital perspective. The changes are in bold.

On Page 41 of the OPPS rule:

Two-Midnight Rule: The two-midnight rule was adopted effective October 1, 2013. Under the two-midnight rule, an inpatient admission is generally appropriate for Medicare Part A payment if the physician (or other qualified practitioner) admits the patient as an inpatient based upon the expectation that the patient will need hospital care that crosses at least two midnights. In assessing the expected duration of necessary care, the physician (or other practitioner) may take into account outpatient hospital care received prior to inpatient admission. If the patient is expected to need less than two midnights of care in the hospital, the services furnished should generally be billed as outpatient services. In this proposed rule, we are proposing to modify our existing “rare and unusual” exceptions policy under which the only exceptions to the two-midnight benchmark were cases involving services designated by CMS as inpatient only, and those rare and unusual circumstances published on the CMS Web site or other subregulatory guidance, to also allow exceptions to the two-midnight benchmark to be determined on a case-by-case basis by the physician responsible for the care of the beneficiary, subject to medical review. However, we continue to expect that stays under 24 hours would rarely qualify for an exception to the two-midnight benchmark. In addition, we are revising our medical review strategy and announcing that no later than October 1, 2015, we are changing the medical review strategy and have Quality Improvement Organization (QIO) contractors conduct reviews of short inpatient stays rather than the Medicare administrative contractors (MACs).

I like the changes stated here, and so should most of the case management and utilization review (CM/UR) world. But this really isn’t a big change, and that is the part with which I wrestle. All the headlines of the major healthcare industry alerts last week announced “Modifications.” I honestly only see one, and that is who will audit for the rule.

The team that will audit for this rule, the QIOs of each state, were comfortable auditing patients’ records in the past. They did, after all, take responsibility for Medicare discharge appeals. That is, they used to, until last October when the contract was given to only two: KePro and Livanta. Last fall was not without its challenges when that process changed. I reached out to both agencies at the request of our hospitals that were holding beneficiaries for this appeal up to nine days in the hospital last fall. I was told by both agencies that they were not given any time to prepare for the changes and they did the best they could. I know they were to report to CMS on a weekly basis, but I did not see any announcements during that time that improvements would take place. I guess the fact that the appeal rate for our Medicare beneficiaries is so small, compared to something that will affect all, is the reason this change did not get much publicity. But honestly, there were many hospitals affected by the changes, and I think of each and every one of those Beneficiaries that did not get their appeal heard in a timely manner. I still hear of challenges and extended lengths of stay (LOS) waiting on appeals because of that change.

I am hoping each of you at least will send in an opinion letter about this opportunity for the auditors. The auditors need to have experienced qualified personnel to complete these audits, and the QIOs need to have time to recruit, hire, and train them. If this change is effective Oct. 1, 2015, please let them recruit, hire, and train appropriately before requesting charts!

If anyone had asked my opinion of what changes could have improved the two-midnight rule, I could have answered very differently. I still do not think we are taking into consideration the elders we are trying to serve with this rule. The initial rule backfired, and CMS has yet to acknowledge that. The initial intent of the rule was to help Medicare beneficiaries who were in the observation level of care too long. It did not do that; it actually pushed more patients into observation with the vague definitions and guidance provided to us as organizations to determine inpatient level of care. The ODFs gave us vague definitions: “Hospital care is care that is needed to be delivered in a hospital.” The MAC Probe and Educate Audits served to confuse us further and created this flurry of activity around what is considered a “complete” medical record at the time of discharge. And then, in April 2015, CMS relaxed the whole premise around obtaining a physician’s order for “inpatient” prior to surgery, further frustrating hospitals that were trying to abide by all the rules and put in systems of checks and balances.

The unintended consequences of this rule have hurt our elders by hurting hospitals and the skilled nursing facility (SNF) transition for many of our patients. I would wager there were more Medicare beneficiaries caught in this trap for the last two years than it helped. CMS also decreased payments to the Inpatient Prospective Payment System (IPPS) by 0.02 percent back in October 2013. They not only paid less for the observation care of these patients, but they also paid us less for the inpatient care. They should be adjusting the payment factor as well, and they have not touched it.

In my opinion, the changes to the proposed two-midnight rule remain smoke and mirrors.

About the Author

Mary Beth Pace is the care management system director for Trinity Health.